Correlation Between Danaos and Safe Bulkers
Can any of the company-specific risk be diversified away by investing in both Danaos and Safe Bulkers at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Danaos and Safe Bulkers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danaos and Safe Bulkers, you can compare the effects of market volatilities on Danaos and Safe Bulkers and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Danaos with a short position of Safe Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaos and Safe Bulkers.
Diversification Opportunities for Danaos and Safe Bulkers
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Danaos and Safe is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Danaos and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers and Danaos is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Danaos are associated (or correlated) with Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Danaos i.e., Danaos and Safe Bulkers go up and down completely randomly.
Pair Corralation between Danaos and Safe Bulkers
Considering the 90-day investment horizon Danaos is expected to generate 1.03 times less return on investment than Safe Bulkers. But when comparing it to its historical volatility, Danaos is 1.31 times less risky than Safe Bulkers. It trades about 0.07 of its potential returns per unit of risk. Safe Bulkers is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 249.00 in Safe Bulkers on August 24, 2024 and sell it today you would earn a total of 163.00 from holding Safe Bulkers or generate 65.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danaos vs. Safe Bulkers
Performance |
| Timeline |
| Danaos |
| Safe Bulkers |
Danaos and Safe Bulkers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danaos and Safe Bulkers
The main advantage of trading using opposite Danaos and Safe Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaos position performs unexpectedly, Safe Bulkers can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Safe Bulkers will offset losses from the drop in Safe Bulkers' long position.| Danaos vs. Genco Shipping Trading | Danaos vs. Costamare | Danaos vs. Ardmore Shpng | Danaos vs. Global Ship Lease |
| Safe Bulkers vs. Global Ship Lease | Safe Bulkers vs. Costamare | Safe Bulkers vs. Navios Maritime Partners | Safe Bulkers vs. Genco Shipping Trading |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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